Is the New Zealand economy Doomed?

 

First understand how economic development works. Capital investment leads to handsaws being replaced with chainsaws, which increases productivity per-hour worked. But capital investment only happens when investors decide your country is a better place to invest in, over some other country. That's the concern.

When governments raise taxes, over-empower union movements, spend too much on welfare, advance protectionism, take bribes (cronyism), waste recourses on political projects, etc, then investors will [rightly] see your country as a bad place to invest in. In turn your nation will be left behind, as the rest of the more capital-friendly world takes off. 

Socialist governments do this. They scare away investors and the result, inevitably, is declining productivity which leads to poverty. Venezuela is the perfect example. A once rich nation that then voted like fools, with a now desperate and growing poverty class. So what have the Venezuelan people done? Learnt nothing (sadly) and voted for more socialism. 

This isn't where New Zealand is today, but there's a growing threat that we should be thinking seriously about - and the threat is literally staring us in the face.

The current Labour government is making bizarre economic mistakes, largely driven by misguided ideologies and its powerful special-interest base - the trade unions. But this is not the greater problem. The greater problem is in the fact that Labour are still extremely popular, even though their performance record is tragic - they've failed with almost everything. The voters blindness, more than anything, will be scaring investors. 

The critical point, is that the sensibility of the voter is much more important than the sensibility of the government of the day. The state of the voter tells investors what the government will look like tomorrow. 

Sure, if a National-Act government gets back in power, and eventually they will, they still won't give confidence to the all-important investors - and no matter what constructive reforms they might pass. Investors can see clearly enough that there's a dominant voter base in New Zealand easily won-over by the socialist side of politics. So regardless of what a National-Act government might do, investors can know that it will presumably be undone by the next leftist government, a few years down the track. 

Sadly, New Zealand has become a bad place to invest. Capitalists and entrepreneurs will be looking to other countries that are demonstrably less risky. The destructive effect of deflected investment will snowball...

A secondary effect of a failing New Zealand will be the rapid out-migration of intelligent New Zealanders to Australia, gutting New Zealand of its most economically important people. Insofar as this happens, and insofar as remaining New Zealanders keep voting left, it might well doom the nation economically.

Time will tell. But again, already New Zealand is recognised as a high-risk nation for investors. The cost can only be paid for one way: Low wages, a talent exodus to Australia, and the replacement of the native population with people from [mainly] India and China.

The individuals solution? Migrate to Australia before New Zealand can't afford to take care of you, in old age. That would be the less risky option.

The national solution? Educate the nation on how economic development works. Make them better voters. Or maybe even demand that they get a basic civics education before being allowed to vote at all.

The video below is my own best attempt at a critical education (about 35 minutes).

The included video is a more direct expression of how economic development works.

-Andrew Atkin